Aluminium: US supply strain risks demand destruction – Commerzbank

Commerzbank’s Thu Lan Nguyen reports that US Aluminium supply remains tight more than a year after tariffs, with a planned Oklahoma smelter blocked on environmental and ownership grounds. Domestic production has actually fallen, while high prices and import premiums damp demand. The bank warns that market balance may come mainly via demand destruction rather than new capacity.

Tariffs fail to spur domestic capacity

"Even more than a year after the introduction of US import tariffs on aluminium, there is little sign of relief in the supply situation in the United States."

"As a result, a significant expansion of production capacity in the US still appears to be a long time coming. Last year, according to the USGS, aluminium production in the US actually declined, despite the tariffs."

"This applies to both primary and secondary production, although imports of aluminium scrap (which is exempt from the tariffs) increased significantly."

"This is likely also related to weaker demand, which was dampened by high prices. Given the persistently high import premiums, there is a significant risk that the strained US market will be relieved primarily by demand destruction."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)